His Liberty Global is in talks to buy Cable & Wireless Communications in a potential cash-and-stock deal that would expand its reach to the Caribbean and Panama.
A purchase could be announced in the next few weeks and Liberty Global may consider spinning off its Latin America unit in the future. Cable & Wireless is seeking more than $5.5bn (€4.8bn).
Denis O’Brien’s Digicel had identified Cable & Wireless as its main competitor in a prospectus ahead of its cancelled IPO earlier this month.
“He [Malone] is going to create another oligopoly in Latin America, after doing this in the US and then in Europe,” said Neil Campling, a media analyst at Aviate Global in London.
Malone telegraphed his intentions to get bigger in the region back in July, when Liberty Global created a tracking stock called LiLAC for its existing assets in Latin America and the Caribbean.
The move gives Malone a new balance sheet from which to start consolidating local assets, Campling said.
The news of a potential deal with Cable & Wireless may also extinguish any last hopes Liberty Global would find common ground for a combination of sorts with Vodafone Group, after the two sides ended their own talks last month.
While Malone had maintained Vodafone’s assets in Europe would be attractive, he said the two companies have different corporate cultures that would make a combination difficult.
Cable & Wireless — in which Malone became a big shareholder a year ago — advanced as much as 9.9% yesterday after rising 21% in the final minutes of London trading on Thursday, giving it a market value of about $5.2bn.
Malone, aged 74, has taken on mountains of debt in recent years to expand European operations as a plunge in interest rates allowed Liberty Global to borrow cheaply.
Liberty Global has spent more than $51bn consolidating cable operations on the continent.
With Vodafone now potentially out of the picture, analysts predict he will focus on content assets in Europe, such as UK television broadcaster and producer ITV, in which Liberty Global owns 9.9%.
Cable & Wireless also asked its shareholders to take no action.
Malone became a shareholder in Cable & Wireless last year when the company bought his cable television and internet provider Columbus International.
As part of that deal, Malone and the two co-founders of Columbus were given a 36% stake of the combined company.
Liberty said that it has — under UK takeover rules — until November 19 to say whether it plans to make an offer.
Bloomberg and Irish Examiner staff